Natural Gas Stockpile’s First 2013 Rise Wasn’t Big Enough

By Brendan Conway

Natural-gas prices are on the rise again Thursday after a look at the country’s stockpile proved (once again) smaller than analysts expected.

The gain of 31 billion cubic feet last week was the first rise of 2013, but it was 2 billion short of the figure forecast in a Dow Jones Newswires survey of analysts and traders. The spot gas price is up 3.9% to $4.38 Thursday afternoon.

From DJN’s Jerry A. DiColo:

“It’s a low number,” said Kyle Cooper, an energy analyst at IAF Advisors in Houston. “The market is going to remain very well supported.” …

With stockpiles close to average, investors will likely pay close attention to signs of high temperatures over the next several months that could raise electricity demand from gas-fired utilities. In addition, the Gulf of Mexico will also come into focus, as investors watch for hurricanes that could disrupt the region’s production.

Analysts at Tradition Energy said in a research report Thursday that unexpected heating demand has “significantly tightened the market’s supply outlook,” before adding that “warming spring temperatures and restart of idled nuclear power plants in the coming weeks should provide strong resistance to further gains.”

Read our earlier coverage on why it suddenly pays to own the United States Natural Fund (UNG), which is ahead by 4.4% Thursday afternoon. United States 12 Month Natural Gas Fund (UNL), tracking a bigger range of futures contracts, is up by 3%. iPath Dow Jones UBS Natural Gas Subindex Total Return ETN (GAZ) is up 4.4%. First Trust ISE Revere Natural Gas Index Fund (FCG), a stock fund, is up 1.8%.

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Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.